Mitsubishi UFJ Said to Weigh Purchase of RBS Assets

RBS, Britain’s biggest government-owned bank, is selling assets including 318 U.K. bank branches and an insurance unit after receiving 45.5 billion pounds of government funding during the global financial crisis, more than any other bank in the world. Photographer: Simon Dawson/Bloomberg

Nov. 3 (Bloomberg) -- Mitsubishi UFJ Financial Group Inc.
may buy project-finance assets from Royal Bank of Scotland Group
Plc as Japan’s largest banks start deploying the $56 billion
they’ve raised in share sales in the past two years.

RBS and the U.K. government, which owns 84 percent of the
lender, have been negotiating with the Japanese company about a
portfolio of project-finance assets valued at about 4 billion
pounds ($6.4 billion), two people with direct knowledge of the
matter said. No final agreement has been reached, they said.

Mitsubishi UFJ is taking advantage from RBS’s retreat from
project finance after raising 1 trillion yen ($12 billion) in a
share sale in December. The purchase would add to the Japanese
bank’s acquisition of UnionBanCal Corp. in 2008 and this year’s
takeovers of two smaller U.S. lenders, as Chief Executive
Officer Katsunori Nagayasu seeks growth outside Japan.

“Japanese banks have long experience in project
financing,” said Kim Young June, who helps manage the
equivalent of more than $12 billion at Woori Asset Management Co.
in Seoul. “It’s the right direction for Mitsubishi UFJ as it’s
a field they know well and has great growth potential.”

RBS, Britain’s biggest government-owned bank, is selling
assets including 318 U.K. bank branches and an insurance unit
after receiving 45.5 billion pounds of government funding during
the global financial crisis, more than any other bank in the
world. It placed some project finance assets in its “non-core”
division and identified them for sale as part of its strategic
plan, the bank said in February 2009.

Japan Banks Prowl

Linda Harper, a spokeswoman for Edinburgh-based RBS,
declined to comment. Beth Gilroy, a spokeswoman in New York for
Mitsubishi UFJ, didn’t have an immediate comment, referring
questions to the bank’s Tokyo headquarters. The talks were
reported earlier today by Nikkei English News.

RBS Chief Executive Officer Stephen Hester, 49, is
shrinking the bank, which last year posted the biggest annual
loss in U.K. corporate history.

At the same time, Mitsubishi UFJ and rivals Mizuho
Financial Group Inc. and Sumitomo Mitsui Financial Group Inc.
are looking outside of Japan’s stagnant economy for growth after
raising a combined 4.5 trillion yen in stock sales.

Mitsubishi UFJ may spend more than 500 billion yen on
additional bank acquisitions in the U.S., Tatsuo Tanaka, head of
global banking, said in an interview in July. The Tokyo-based
bank aims to boost overseas profit by more than 40 percent to 1
trillion yen, he said.

Project Financing

Sumitomo Mitsui’s head of international banking, Hiroshi
Minoura, said in July that the bank may invest as much as $5
billion for a stake in a U.S. bank in the next three years.
Mizuho may seek stakes in Asian investment banks and would
consider spending about 100 billion yen on an acquisition should
it find a suitable target, a senior executive said in September.

Japanese banks have sought to increase their share of the
global market for financing everything from nuclear power plants
to water-supply systems as overseas rivals scarred by the credit
crisis retrenched.

That push has been helped by the Japan Bank for
International Cooperation, the state-run agency that lends to
overseas projects, often together with local commercial banks.

JBIC will seek to ally with Japanese commercial banks to
provide syndicated loans totaling about $5 billion for clean-energy and water-supply projects abroad, Takashi Hongo, head of
the agency’s environment finance engineering section, said in a
September interview. JBIC would provide half of those loans, he
said.